A Mojave desert bloom

Airlines putting decommissioned jets back in service

By

AugustCole

MOJAVE, Calif. (CBS.MW) -- In this desert town, locals have long gauged the airline industry's strength by watching the skies to see whether planes are inbound or outbound from the Mojave Airport near the foot of the Tehachapi Mountains.

By that measure, more than two years after the Sept. 11 attacks, the airlines are on their way back from their worst-ever downturn.

"Our thermometer on this industry is how many are here today," said Stu Witt, manager of operations at the Mojave Airport. "If there's less here today than there were yesterday, the thermometer says the industry is going through a recovery." Listen to more from Witt.

Avtel Services, the maintenance firm that takes care of the planes stored at the airport, had 60 aircraft in storage on the day terrorists hit the World Trade Center.

That number swelled to 310 by the summer of 2002. It's now down to 150, and foreign-based carriers are likely to put many of them back into service.

Today, the Mojave parking lot is a mosaic of flight. Along with decades-old relics, a visitor can see columns of planes that Avtel has meticulously sealed to protect against the Southern California desert's cycles of driving rain and scorching heat. There are commercially viable jets decommissioned by airlines and leasing companies the world over, from mammoth four-story KLM 747s to slimmer Swissair MD-80s. Watch a slideshow of the stored planes.

Most of the planes are narrow-body jets, now less in demand than double-aisle aircraft that can carry more passengers, despite U.S. carriers' continued shift from long-haul non-stops to a more lucrative stopover system.

Since 1994, the Avtel facility has accommodated the industry's ebb and flow, preserving planes when times are tough and restoring them when the airline business picks up again.

The recent leap in outbound planes, however, does not mean that U.S. airlines are flying high, said Justin Loucks, Avtel Services general manager. "We've seen the industry get a good deal healthier in the 2003-era ... but we're a long way from being at pre-9/11 levels."

At the crossroads

The first planes to be parked at Mojave were TWA's Convair fleet in the early 1970s during one of the industry's many down cycles. The airport had the space and the right climate. Some of those planes are still there.

"We had a runway that could handle them, and we could set them in the dirt right then and do minimal work to preserve them," Witt said.

The airfield contains more than a few time capsules, such as an Aer Lingus rooted in an era before passengers had to beg for a second bag of peanuts. "When you crack the hatch and walk in, you go 'wow, this is what first class looked like in 1958,'" Witt said.

The dry air of the Mojave desert is an ideal environment for storing planes. During the hotter months, Avtel opens the planes for better ventilation.

Mojave has long been an intersection of commerce, from a mule train thoroughfare in the 1800s and an Okie stopover during the Great Depression's westward migration, to supersonic aircraft testing in the 1950s. That tradition continues as trucks, trains and planes all converge on the area.

The airport's unassuming collection of hangars house some of the world's most sophisticated aircraft, such as prototypes created by Scaled Composites, which is working on aircraft suitable for commercial space flight.

Of course, gauging the strength of the airline industry involves more than counting tails in one corner of the desert. Planes are stored all over in arid pockets of California, the southwest and elsewhere in the world.

David Strauss, a UBS aerospace analyst, estimates some 2,100 aircraft, including small regional jets too, are in storage around the world, with 700 to 900 aircraft returning to the skies during the next three years.

Remaining hurdles

The U.S. airline industry continues to be dogged by weak ticket pricing, geopolitical jitters and high prices for jet fuel.

Still, airlines are adding back capacity around the world, and one of the easiest ways they can do so is by squeezing more time out of the planes they already have in service. Another way is to call on Avtel, which get one of the Mojave jets back into flying shape in a matter of days.

"About a third of the overall planes in the desert are relatively modern planes that are likely to return to service at some point," said Phil Baggaley, an analyst with Standard & Poor's.

Take American Airlines
AMR, -7.29%
which has 28 Super MD-80s in storage. Though it has begun using the current fleet of MD-80s more efficiently, the parked planes could be called back.

"Having them gives us some flexibility if we need to grow in the future," said American Airlines spokesman Carlo Bertolini.

With the many of the best planes picked through, don't expect to find yourself flying on one of the remaining 150 aircraft at Avtel anytime soon. They are mostly not of interest to U.S. carriers. Instead, the newest, most efficient equipment is in high demand. Avtel never stored any of Boeing's modern 777s after Sept. 11.

It's not that the planes can't be made ready for duty, and safely. FAA rules dictate strict maintenance and flight certification standards. But the complex economies of scale at big airlines mean saving money is imperative when ticket prices remain weak and business travelers are scarce. Accordingly, passenger airlines are turning to newer planes that require less costly trips to the maintenance shop and have up-to-date, younger equipment. Watch a slideshow of the stored planes.

"I think that want might be different about this cycle as opposed to prior cycles from the aircraft perspective, the storage perspective, I don't think a lot of those airplanes are going to come out of the desert," said John Plueger, COO of aircraft leasing giant International Lease Finance Corp. "Airplanes that are perhaps greater than 15 years of age, I think there's a very low chance they're going to fly again." See more on ILFC.

That's why U.S. airlines have gotten very picky and many parked planes are there to stay until someone else decides to buy them. Demand is strong, but not that strong that they are scouring the high desert for any way to get more seats in the air.

There is still a market for these aircraft, however, as demand improves around the world. But it's not always at home.

"The number of airplanes in storage, while being reduced because they're going back into service, are not going back into service in the United States," said Avtel's Loucks. Foreign carriers in South America and Asia are, however, very interested in these planes because they are so cheap.

In the end, the global industry's biggest problems can't be fixed by bringing back old planes from places like Mojave.

Passengers may be returning to the skies, but the biggest U.S. airlines are still unable to raise ticket prices because a growing number of smaller airlines, and established players like Southwest Airlines, are consistently attacking their most lucrative routes with cut-rate fares. Making matters worse for everyone, fuel prices are at historical highs, driven skyward by oil prices that never got the promised post-Iraq relief.

Whether these are short-term trends or lasting changes in the industry is still up for vigorous debate. Until that question is answered, it will pay to keep a close eye on the planes parked in the desert, noses pointed toward the Tehachapi Mountains.

As Mojave Airport's Witt sees it, "As long as they're going back [into service], the future is fairly sound. If we start putting them on the ground, it is leading a downturn."

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